American Oil and Gas Reporter - February 2019 - 100

ConventionSection: Ohio Oil & Gas Association

Well Plugging, State Leasing
Atop Association Agenda
By Danny Boyd
Special Correspondent
COLUMBUS, OH.-With new Governor Mike DeWine's swearing in on
Jan. 14, members of the Ohio Oil & Gas
Association prepare for their annual meeting, taking place March 6-8 at the Easton
Hilton at Columbus, hoping to guard
against severance tax revenues being diverted and to have a seat at the table as
the new administration implements a
well-plugging program authorized by the
legislature last year, as well as leasing of
state mineral acreage.
"We feel we have a governor in Mike
DeWine who looks on the industry favorably and realizes the benefits this industry brings to Ohio in terms of jobs,
the prospect of a vibrant manufacturing
and chemical industry, and the oil and
gas our members produce that lower energy costs for Ohio utility customers,"
says incoming association President
Steven Downey.
"By all indications, Mike DeWine
and the leadership at the Ohio Department
of Natural Resources certainly will work
with us, which is very important to us
as we drill, produce and plug wells,"
Downey notes. "We just want to have
the opportunity to have a seat at the
table and help work through the issues
that affect our industry."
One issue that likely will be on the
plate of the 133rd General Assembly,
which gaveled into session at the Capitol
on Jan. 7, is a continuing look at disposal
well permitting, says OOGA Executive
Vice President Matthew Hammond.
"I expect we will work with both sides
of the aisle on the issue, educating members on best-practice safety precautions
the industry takes involving disposal in
Ohio," Hammond says.
HB 723 by Representative Glenn W.
Holmes, D-Girard, was referred to the
House Energy and Natural Resources
Committee in November and calls for
limiting the number of injection well permits that can be issued in a county by the
chief of the Division of Oil and Gas Resources Management, according to a bill

summary from the assembly.
It also requires the chief to provide
written notice of an application for an
injection well within three days to each
state representative and senator in whose
district the injection well is proposed to
be located, according to the summary.
State Minerals
OOGA also plans to work with the
now-filled Oil and Gas Leasing Commission created by HB 133 in 2011 on
procedures for leasing state lands for
mineral development, says Downey, vice
president of business development and
marketing at EnerVest Operating LLC in
Charleston, W.V.
The five-member panel, chaired by
the chief of the Division of Geological
Survey, was filled only recently by outgoing
GOP Governor John Kasich, Downey
points out, although royalty revenue from
drilling on state-owned mineral acreage
will benefit Ohio state government.
"It has been a struggle because we
have had operators with parcels that
extend onto state lands, which caused
development to stop because they couldn't
drill on state-owned lands since the state
previously would not address the issue,"
he says.
In some instances, the lack of state
leasing hindered OOGA member companies from forming units on adjacent
private lands, Hammond says, adding
that any new leasing procedures should
help operators wanting to lease already
prospective state-owned acreage.
Although state government may have
missed opportunities for more leasing interest around Salt Fork Park because of
diminished drilling in the area, state land
for possible lease elsewhere may be available in areas prospective of the Utica
Shale, he says, including land owned by
the Ohio Department of Transportation.
"It is something we would like to
work on with the DeWine administration,
and sit down with the governor and his
policy team, including Mary Mertz as
the new director of natural resources,
and start talking about the leasing commission and leasing policy," Hammond

100 THE AMERICAN OIL & GAS REPORTER

says. "It is something the industry has
been looking forward to."
Idle And Orphaned Wells
With the DeWine administration in
place, OOGA is looking expectantly toward the formulation of state rules for
plugging the state's idle and orphaned
wells, following passage last session of
HB 225, Hammond says. The new law
and its ensuing implementation could
open additional opportunities for member
contractors, he adds.
"The bill was passed unanimously and
was backed by OOGA, the Ohio Environmental Council and the Ohio Farm
Bureau, which shows that the industry is
committed to using its severance dollars
to address unplugged legacy wells that
have been out there since the late 1800s
and early 1900s," Hammond says.
He says the association expects the
Department of Natural Resources, as required by HB 225, to bolster well plugging
outlays from 14 to 30 percent of revenue
in its Oil and Gas Fund that comes from
severance taxes and industry fees. OOGA
wants to break down legislatively any
additional barriers that may make it more
difficult for members to participate, he
says. Additional legislative fixes could
streamline the process of cataloging wells
and implementing required regulatory infrastructure to help the DOGRM meet
the 30 percent spending requirement in
the statute.
"The bidding process itself is very
complicated, but that is the way state
contracts are," Hammond observes. "It is
going to take a little bit of time to ramp
that up. Every indication we have received
is that the division is working on building
personnel and infrastructure around the
orphaned well plugging program, which
is really exciting."
There is plenty of work to be done, he
allows. Although DNR has a list of about
700 orphaned and abandoned wells, the
actual number could exceed 10,000, Hammond estimates. "These wells are in three
of the four quadrants of the state and
matter to legislators in northeast, northwest
and southeast Ohio," he says.
American Oil and Gas Reporter - February 2019

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